In a November 9, 2017 decision, Justice Phelan of the Federal Court found that the Patented Medicine Prices Review Board Panel (Board) was unreasonable in its assessment that a patent ‘pertained’ to Galderma Canada’s DIFFERIN (0.1% adapalene), as the Board failed to consider the entire patent: Galderma v Attorney General of Canada, 2017 FC 1023. As a result, the Court quashed the Board’s decision requiring Galderma to file pricing information for DIFFERIN.

Galderma had patents that covered DIFFERIN, which expired in March 2007 and December 2009. Galderma provided sales and price information to the PMPRB for DIFFERIN until the second patent expired in December 2009.

Galderma also had a patent that covered DIFFERIN XP (Patent No. 2,478,237 or 237 patent), which expired in March 2016. All claims of the 237 patent include a 0.3% adapalene limitation. Galderma provided sales and price information for DIFFERIN XP until expiry of the 237 patent in March 2016.

Seven years after the DIFFERIN patents expired, PMPRB staff alleged that Galderma had failed to provide information regarding DIFFERIN, pointing to the 237 patent.

There is a three-part test for determining jurisdiction of the PMPRB:

(i) Is the party a patentee of the invention?

(ii) Does the invention pertain to a medicine?

(iii) Is the medicine being sold in Canada?

The key issue before the Board was whether part (ii) of the test had been met, i.e. whether the invention claimed and described in the 237 patent ‘pertains’ to DIFFERIN. Section 79(2) of the Patent Act provides that “an invention pertains to a medicine if the invention is intended or capable of being used for medicine or for the preparation or production of medicine.”

As previously reported, the Board concluded that the 237 patent pertained to DIFFERIN, noting “although 0.3% is mentioned in the abstract, it is not mentioned in the introductory paragraph or the title of the 237 patent and the patent does not, on its face, relate exclusively to a 0.3% concentration of adapalene.” The Board ordered Galderma to provide sales and price information for DIFFERIN through to March 2016. Galderma sought judicial review.

The Board’s decision was unreasonable

Regarding the standard of review, the Court held that “the Board is entitled to deference on the scope of ‘pertains’ so long as it asks the right question, and does not so stretch the application of ‘pertains’ such that it strays into constitutionally impermissible grounds to regulate drug prices which are not sufficiently connected to a federal field of jurisdiction (i.e. patents).”

The Court concluded that the Board misapprehended the question and engaged in an unreasonable analysis. The Court found that the Board failed to determine what the invention of the 237 patent was, a required step before the Board could determine whether the invention was intended or capable of being used for the medicine. Instead, the Board incorrectly focused on the commonality of ingredients between DIFFERIN XP and DIFFERIN, and never determined whether the DIFFERIN XP medicine was intended or capable of being used for the DIFFERIN medicine. Indeed, the evidence was that they were two separate medicines and there was no evidence that the former was intended or capable of being used as the latter medicine.

While the Court accepted that the analysis of whether a patent pertains to a particular drug does not include a step of claims construction, the Court noted that the Board referenced only the abstract and introductory paragraph, with no reference to the claims, description or scope of invention. The Board’s failure to review the whole patent was found to be unreasonable, including as it was unclear how the Board, if it had examined the whole of the 237 Patent, particularly its claims, could have concluded that the patent covered more than 0.3% adapalene.

The Attorney General of Canada has appealed the decision to the Federal Court of Appeal.

In other PMPRB litigation news, on November 1, 2017, the Federal Court of Appeal heard Alexion’s appeal of a decision striking Alexion’s constitutional challenge to the price regulation scheme and confiscatory powers found in sections 83-86 and 87(1) of the Patent Act, as previously reported. A decision is presently under reserve. Related to this, Alexion also has a pending judicial review of the Board’s decision that Alexion sold SOLIRIS (eculizumab) at excessive prices, as previously reported.

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